Analytics, Cooperation, EU – Baltic States, Modern EU

Macro-regional cooperation in the European Union has a rather short history: it originated a decade ago in the Baltic Sea region (BSR) in order to “unite" regional authorities around quicker and more efficient solutions for local issues. The only requirement for the EU’s support was that these issues should have a “European dimension” (instead of purely local): i.e. they have to be within the EU’s integration process.

During the last decade the macro-regional concept proved its deliverance: several other sub-regional strategies were adopted within the EU: for example for the Danube region, Adriatic-Ionian and Alpine regions (during 2011-15); sometimes these strategies even include non-EU countries. Besides, there are other sub-regional groupings in the EU: e.g. Benelux-3 countries or Visegrad Four, including (Czech Republic, Hungary, Poland and Slovakia). 

Thus, to deliver on these objectives, Commission’s DG Regio provides support through the “financial interventions” by the European Regional Development Fund (ERDF) and the Cohesion Fund (CF), together with the European Structural and Investment (ESI) Funds (which include European social fund (ESF), European Agricultural Fund for Rural Development (EAFRD) and European Maritime and Fisheries Fund (EMFF). To that end, the Treaty establishes the European Structural and Investment Funds, ESIF (Lisbon Treaty, art. 175).  

These “regional funding” during last five years (2014-19) accounted for about one-third of the total EU budget (about € 45 billion a year); for example during 2017, about 660 action plans have been adopted in the EU states. Thus, in one year only (2017), two pilot projects were launched: a) to provide tailored support for regions facing industrial transition, and b) help inter-regional partnerships to develop competitive European value chains. The both aimed at providing adequate assistance to all European states/regions in investing in their niche areas of competitive strength (so-called "smart specialisation" process, 3S) and generate innovative and resilient growth needed to withstand globalization’s challenges. 

There have been already 10 EUSBSR’s conferences; the 11^th one titled “European sub-regional strategies” (17 June 2020) will take place in Turku/Finland; this yearly conference’s motto: “Our Region, Our Future-Towards a Decade of Innovation and Sustainability”.

Source: https://www.balticsea-region-strategy.eu/

Quite remarkable is that the 10^th EUSBSR Forum’s motto was: “reduce, reuse and rethink”: it provided a platform for discussions on present and perspective regional authorities’ planning on sustainable and circular economy issues.

Attention to circular economy has become an important “path to wellbeing of the people in the BSR” and became a dominated model in regional economy. Instead of age-old approach based on “take-make-consume-dispose” concept, which is completely unsustainable, it has to be re-arranged with new notions concentrated on reuse, de-compose, recycle, de-consume, etc. with additional validity of an appropriate education and training in sustainability principles. For example, presently Latvian recycling share is the lowest among states in BSR with 39%, compared to 46% in Lithuania, 47% in Estonia and over 50% in Denmark and Sweden. Thus, both new circular economy principles and waste management are becoming highly desirable aspects in sub-regional cooperation.

More in: Circular economy’s priority in the 10^th EUSBSR Forum. 15.06.2019. In:

http://www.baltic-course.com/eng2/modern_eu/?doc=149881; additional reference sources in:

Baltics’ regions: lessons from EUSBSR, in: http://www.baltic-course.com/eng2/editors_note/?doc=20623.

Regional disparities in BSR

The disparities in the regions of the BSR states are still great: the reduction shall be a political and socio-economic priority for decision-makers. 

More in: Eteris E. Comprehensive EU strategy to target urgent regional challenges. In:

http://www.baltic-course.com/eng2/modern_eu/?doc=149719   

While the gap in living standards among BSR’s states has been reduced during last decade, the differences abide: e.g. economically (through the GDP per capita), about 81% of the EU’s average in Lithuania and Estonia and 70% in Latvia, whereas corresponding figures in the Nordic states are: 110% of the EU’s average in Finland, 121% in Sweden and 126% in Denmark.

Source: Latvijas intereses Eiropas Savieniba (2019/2), “Bowling together: Nordic Baltic Six in the EU”, p.20.  

EU political priorities in the BSR’s “smart specialization”

The 3S concept means that “smart” growth in the EU states resides on innovative approaches to development, which include the perspectives of the 4^th industrial revolution. Another “S”- specialisation – is about the states/regions’ capacities in using available resources (natural, human, etc.) in achieving competitive advantages in Europe and globally. Finally, “strategic growth” means defining perspective vision for any state/region in the long-term perspective.

Thus, a uniting factor in 3S is a strategic economic growth through support for research and innovation.

More in: Sparitis O. and Eteris E. Modern European science policy: challenges and opportunities for Latvian perspective growth. - SIA Medicinas Publish. 2019. – 124 pp.

Looking at the priorities in the BSR, it is important to see the contents of the EU’s growth strategy for 2021-27. There are four vital dimensions in the EU’ perspective growth directions: first, a transition to a nature-friendly and climate neutral policy as the EU’ goal up to 2050. Second, developing new technologies and sustainable solutions with which the EU states can increase their economies and become global leaders in an increasingly digitalised world, including cybersecurity, artificial intelligence and 5G. Therefore, for example, the digital technologies have become a key enabler in the European Green Deal.

Third, the necessary measures to complete the EU’s economic and monetary union (EMU) to ensure that all economic tools are available to adverse possible economic shock; in this regard, the international role of the euro must be strengthened to enhance European SMEs’ role in the global markets. A vibrant and resilient EMU shall rest on the solid foundations provided by the two other EU “unions” – the Banking Union and the Capital Markets Union.   

Fourth, the new economic agenda must ensure that the transition is fair and inclusive; it must pay particular attention to the regions, industries and workers who will have to make the largest transitions.

Examples of 3S in the Nordic states

A national 3S strategy - up to the end of 2020- was adopted in Sweden in 2015 for sustainable growth with the following priorities: new bio-based materials, products and services; Internet of things; ICTs introduction in electric components and systems, in automotive industrial processes; Graphene’s industrial use; prevention of endemic diseases; “Production 2030” program for advanced manufacturing; light-weight and metallic materials and construction; and mining and metal extraction. 

Swedish strategic innovation agendas and programmes serve as the guiding tools for industry, the public sector and academia to collaborate for common priorities in terms of investments in research, development and innovation.                                                                      Source:https://s3platform.jrc.ec.europa.eu/documents/20182/232763/SE_NAT_Strategy+for+sustainable+growth+and+attractivity+2015-2020

Finland has not revealed specifically the 3S priorities; they are included into several national programs supported from the ESIF and other EU funds with the total amount of about € 8 billion during 2014-20. The main programs’ items, according to the EU’s allocation’s resources are: environment protection and resource efficiency (about €2 bn); climate change adaptation and risk prevention (about € 1,8 bn); competitiveness and SMEs (about €1,4 bn); research and innovation (about € 0,8 bn); sustainable and quality employment (about €0,7bn); low‑CO2 emission’s carbon economy, social Inclusion and education – all three about €0,4-0,5 bn each.

These EU’s allocation showed the European smart specialisation priorities applied to Finland.  

Source: https://cohesiondata.ec.europa.eu/countries/FI#

3S in the Baltic States and Poland

= Estonian 3S priorities include: e-health, bio-technology (incl. healthy food, medicine, diagnostics, therapy and bio-banking); ICT industry and robotics; other ICT’s application (incl. cybersecurity, robotics, e-governance and “big data”); materials technology, and rational use of natural resources.  

Source: https://s3platform.jrc.ec.europa.eu/regions/EE/tags/EE   

= 3S priorities in Lithuania are the following: agricultural innovations and food technologies (incl. sustainable agro-biological resources and safer food; innovative food processing/development, as well as improvement and processing of biological raw materials, such as bio-refinery); sustainable energy, (incl. energy efficiency, diagnostic, monitoring and management of generators and grids; energy and fuel production using biomass/waste with waste treatment and disposal; development of smart low-energy-digital construction; solar energy equipment and technologies in electricity, heating and cooling); new materials, production processes and technologies (incl. photonic and laser technologies, functional materials and coatings, structural and composite materials, as well as flexible technological systems for product development and fabrication); health technologies and biotechnologies (incl. molecular technologies for medicine and bio-pharmacy; advanced applied technologies for individual and public health; advanced medical engineering for early diagnostics and treatment); transport, logistics and ICT (incl. smart transport and communication technology systems; modeling management of international transport corridors; advanced electronic technologies; ICT infrastructure, cloud computing solutions and services); inclusive and creative society (incl. modern education technologies and processes; technologies for the development and implementation of breakthrough innovations).         

Source: https://s3platform.jrc.ec.europa.eu/regions/LT/tags/LT

= Smart specialisation priorities in Latvia include: knowledge intensive bio-economy (incl. Sustainable and productive forest management with innovative high value-added niche products from wood; full wood biomass use for chemical processing and energy; innovative plant and animal breeding technologies; food safety); biomedicine, medical technologies and biotechnology (incl. chemical and biotechnological methods for production of pharmaceutical and bioactive substances; new human and veterinary medicinal products; individualized treatment and diagnostic methods using cell technology; functional foods, therapeutic cosmetics and bioactive natural substances); smart materials, technology and engineering (incl. implant and composite materials, thin layers and coatings, equipment and machinery;  glass fiber products and smart glass-based materials); advanced ICT (incl. innovative knowledge management, system modeling and software methods; sectoral ICT hardware/hardware applications; cyber-physics systems, language technologies and semantic web; bulk data and knowledge infrastructure; information security and quantum PCs; computer system testing methods); smart energy (incl. development of smart grids in the demand-supply systems, smart buildings and automotive house systems; modern technologies for energy from renewables; Increasing energy efficiency in construction and residential infrastructure elements; sustainable energy for transport and electric mobility).

Source: https://s3platform.jrc.ec.europa.eu/regions/LV/tags/LV

More on Latvian “green growth” and new perspectives in:  

http://www.baltic-course.com/eng2/editors_note/?doc=20885  

= 3S for Poland include: healthy society (incl. new medical products and manufacturing technologies for diseases’ diagnosis and advanced therapy); bio-economy (incl. agro-food, forestry and environment); innovative bio-technological technologies and products (incl. organic and flexible electronics, automation and robotics, photonics, creative technologies and innovative marine technologies); sustainable energy (incl. smart-energy efficient construction, high efficiency, low-emission and integrated circuits for manufacturing, storage, transmission and distribution of smart-energy-grid, as well as sustainable transport solutions); natural resources and waste management (incl. processing technologies for rational use of natural resources, optimizing consumption and re-use of secondary raw materials for energy mix).  

3S in the BSR states: some challenges and perspectives

Generally, the EU's target is to reach 20 per cent of its energy mix from renewable sources by the end of 2020 and at least 32% by 2030. Among the EU-27 states, 12 countries (including 6 BSR states) have already reached a share equal to or above their national 2020 binding targets: Bulgaria, Czechia, Denmark, Estonia, Greece, Croatia, Italy, Latvia, Lithuania, Cyprus, Finland and Sweden. Electricity production from hydro power and wind power is accounted according to normalisation rules of Annex II of Directive 2009/28/EC. Since 2011, only biofuels and bio-liquids declared by countries (as compliant with criteria of sustainability defined in art. 17-18 of Directive 2009/28/EC) are included in the share of energy from renewable sources.

Reference to: https://ec.europa.eu/energy/en/topics/renewable-energy

Sweden has had by far the highest share in 2018 with more than half (54.6%) of its energy coming from renewable sources, ahead of Finland(41.2%), Latvia(40.3%), Denmark(36.1%) and Austria(33.4%). At the opposite end of the scale, the lowest proportion of renewables was registered in the Netherlands - 7.4%; low shares, less than ten percent, were also recorded in Malta - 8.0%, Luxembourg - 9.1% and Belgium - 9.4%.

During 2021-23 Lithuania is likely to see a new boom in the construction of new turbines; country’s wind power plants generated a total of 1.453 terawatt-hours (TWh) of electricity in 2019, a rise of almost 28 percent from 1.139 TWh in 2018.

Source: http://www.baltic-course.com/eng2/good_for_business/?doc=153969

EU’s Interreg program

In relation to the European Commission’s draft regulation on Interreg published in May 2018, the Commission in the Orientation Paper recommends that the future Interreg Baltic Sea Region program could be thematically focused on the Policy Objective 1 (“smart Europe”), Policy Objective 2 (greener and low-carbon Europe) and an Interreg-specific objective (better Interreg governance; safer and more secure Europe).

The future Interreg Baltic Sea Region programme would also continue to support the implementation of the EU Strategy for the Baltic Sea Region.

More in Interreg in: https://www.interreg-baltic.eu/post2020.html

In the Joint Programming Committee both EU countries participate as well as Norway, Russia and Belarus; it was created at the end of 2019 with main tasks to select future thematic priorities and allocate funds to those priorities in the BSR. The first meeting took place this February under the Latvian chairmanship. Interreg has a managing authority in Germany and a joint secretariat with branches in the member states: e.g. Riga office is attached to Latvian State Regional Development Agency.  

Source: https://www.interreg-baltic.eu/news-detail/news/programming-of-the-future-interreg-baltic-sea-region-kicks-off.html

Conclusion

The 3S-idea stems from the time of the so-called EU Constitution some 20 years ago; however, the project failed initially to take shape, but the “federal concept” in the European integration survived. In the Lisbon Treaty-2009 this concept has been depicted in the division of competence between the EU institutions and the member states (e.g. excusive, shared and supporting). However, in 2011 the EU institutions started a massive advice program for national and regional authorities on their specialisation strategies, formally called “the 3S”. The ultimate idea was to enabling the 3S approach in each state and region to be included into their “competitive advantages” process in both Europe and worldwide. 

In March 2017, the Commission’s “white paper” envisioned five scenarios for a “future of Europe’s concept” giving the member states certain “freedom” in integration efforts through cohesion policy/funds.  Without any firm conclusions on “scenarios”, the present Commission’s College adopted a new “strategic political agenda” for the next five years, which includes among other directions: - the European “green deal”; - digital economy; - progressive democratic institutions; - attention to the “social market economy”, and – increasing the EU’s role in the world. 

Taking into consideration the EU’s strategic agenda, the 3S-concept is supposed to drive the states’ growth pattern along “smart specialisation” regarding their own resource/priorities and competition’s challenges. However, specialization’s trends in the BSR states do not seem to create “national growth niches” with one-two-three major development directions; examples in some Nordic/Baltic States have shown that the specific diversification is rather broad! On the contrary, there are numerous overlapping and integrated 3S spheres providing for closer cooperation among the countries in BSR; it’s time for a more radical political decision towards “common 3S dimension”.